Introduced on 1 July 2012 the Taxable Payments Reporting system is used by the ATO to identify contractors who haven’t met their tax obligations. However, many businesses have been slow to implement this process, as it has been difficult to track the lodgement of these reports. This could potentially expose many businesses to ATO penalties and audits.
If your business derives at least 10% of your GST turnover from one of the following areas, you need to lodge a TPAR for the 2020 financial year by 28 August:
- building and construction services;
- cleaning services who make payments to contractors;
- courier services who make payments to contractors;
- road freight services who make payments to contractors;
- information technology (IT) services who make payments to contractors;
- security, investigation or surveillance services who make payments to contractors;
- mixed services (a business that provides one or more of the services listed above).
The invoice you would have received from the contractor should have the details you need to report.
- their Australian Business Number (ABN);
- their name and address;
- the gross amount you paid to them for the financial year (including any GST).
This information is then used by the ATO to find contractors who have reported their income incorrectly. The ATO system is supported by state-of-the-art data-matching technology that links to banks and other third-party providers. The TPAR system has seen the ATO already receive more than $2.7 billion from the building and construction industry in the 2016 financial year.
Most modern accounting systems can track TPAR information provided, the system is set up correctly. Please contact our office on 03 5221 6399 or email us at firstname.lastname@example.org for more information about your reporting requirements.
Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Davidsons accepts no responsibility for any loss suffered as a result of any party using or relying on this article.